Subway will run Connecticut highway plazas

State deal with Subway franchiser includes renovations

By Martin B. Cassidy, martin.cassidy@scni.com

Published
1:04 am EST, Thursday, November 26, 2009

The state has signed a 35-year contract with a regional Subway restaurant franchiser and private equity firm to supply food and fuel and overhaul the state's highway plazas, an agreement that for the state will include a combined $500 million in revenue and investment to make over the 23 properties on Interstate 95, the Merritt Parkway and Interstate 395, Gov. M. Jodi Rell announced last week.

The state Department of Transportation awarded the contract to Doctor's Associates-Paul Landino, of North Haven, which develops Subway restaurants in Fairfield, Litchfield, New Haven and Middlesex counties, as well as New York City, and will be taking over the plazas in partnership with the Washington, D.C.-based Carlyle Group, a large private equity firm, according to the governor's office.

The partners will invest $178 million to modernize and upgrade the plazas, according to the governor's office; Doctor's Associates will formally take control of the project beginning on Dec. 7.

The DOT said the facilities are outdated and have not been substantially improved for more than 25 years.

Paul Landino said the plazas would undergo a series of renovations starting in 2011. Three of them, including both the northbound and southbound I-95 plazas in Darien, will be replaced with 24,000-square-foot buildings, he said.

For the time being, few changes will be made to area plazas, which will begin to incorporate new vendors as they are remodeled, Landino said.

McDonald's, which has provided food at state plazas since 1985, will remain one of the restaurants in eight of them, under the agreement. All plazas will include a Subway, a Dunkin' Donuts and a convenience store, the DOT said.

"There will be a big transition, but the change will be gradual," Landino said. "Our intent is to very gradually add the brands as we redevelop and really turn the rest areas more into service plazas and mini-malls."

Under previous agreements, the state got too small a portion of millions in revenue, he said.

McDonald said it is also unclear what funding arrangements the state has made with ExxonMobil to deal with any necessary environmental cleanup from its gas stations at the plazas.

"This seems like a well-conceived and appropriate deal that will enhance our service plazas for decades to come," McDonald said.

The contract was signed this week.

The plazas sell about 50 million gallons of gasoline a year, and bring in about $56 million from food and other goods sold, according to the DOT.

DOT Spokesman Judd Everhart said the state had sought a single entity to run and modernize the facilities because it wanted to move ahead with the upgrades, and to simplify their management and oversight of the plazas.